Real estate market

[ncbill]

You're still ignoring the opportunity cost of not investing the equity tied up in the home.

The real return on that equity, cashed-out and invested in the stock market has been far higher than the real return for residential real estate.

 

[pb4uski]

Do you know of any market where the rent for a home is cheaper than the taxes and insurance alone? I've yet to see that market myself. In the market where it saves money to not have to pay a mortgage or rent and still have a place to live (everywhere I've ever heard of), the renter is the one losing the opportunity cost of money compared to the person in the paid off home.

Pay off a home in 15 years at a low interest rate, then have 40 years of no rent or mortgage would, in my rough napkin calculations, provide a lot more opportunity for wealth accumulation than that same person paying rent for 55 years in pretty much every market..

You proved my point... you are ignoring the opportunity cost of money by considering only taxes and insurance.

If you are renting and decided to buy and own free and clear then an amount equal to the purchase price of the property will NOT be invested and will not be earning interest, dividends and capital gains. Conversely, if you own and decide to sell and rent, then you will have the proceeds from the sale invested and be receiving interest, dividends and capital gains.

Other factors as well, but investment return (aka opportunity cost or the time value of money) is an important determinant.

Check out https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

 

[exnavynuke]

You're still ignoring the opportunity cost of not investing the equity tied up in the home.

The real return on that equity, cashed-out and invested in the stock market has been far higher than the real return for residential real estate.

Assumption #1 is that I have to pay for a place to live. This will either be paid for in the form of rent or PITI (hopefully followed by a long period of just TI). The "equity" that I get from the PITI and can later use to downsize to a smaller/cheaper home is why many people say that renting is "throwing away money" because renting doesn't get you that.

If I'm going to spend $1,500 on housing per month, starting with $0 invested/saved (let's assume a VA loan with 0% down), whether renting or buying (since rental prices are on par with owning prices where I live), that money isn't getting invested in either case. It has no "lost opportunity cost" due to putting it towards something that builds equity vs paying it to a landlord. 15 years from now, however, I'm still going to be paying inflation adjusted full rental price if I rent while I'll be paying a small fraction of the $1,500 to cover taxes/insurance/maintenance instead if I used that $1,500/month to pay off my own home.

You can't "cash out" the rental checks you paid (the landlord did that already), just like you generally won't "cash out" your only place to live. So, the "opportunity cost" difference isn't "what the house is worth and what that would get if I invested it". The real opportunity cost is "the difference in cost between renting and buying".

So the "opportunity cost" is the difference between rental cost or owning cost and what the cumulative effect of that difference might be. In "an average" market, similar homes for rental and owning have similar costs with rentals tending to be slightly less costly UNTIL the mortgage is paid off, then there is a massive shift to owning having a much lower cost.

 

[foxfirev5]

Being a lifelong real estate bottom feeder I can not relate to your sense of urgency regarding this purchase. It looks like you're not really all that familiar with this geographic area and renting vs buying. Just because things are "going up" is not a reason to jump in. Probably the opposite.

Take your time, investigate all the factors including the lost opportunity costs of your money. (IMHO even 3% return will shed some light).

As I told my lakehouse neighbor - "For what we spend on these places each year we could have a couple pretty nice five star vacations anywhere. Her reply was an emphatic "EXACTLY". However dollars are only a small part of the equation.

 

[sengsational]

Being a homeowner involves taking risk, so if we believe the basics, being a homeowner should be more rewarding (in the long run).

Are there financial instruments where you could short-sell the residential housing market in a specific geography? It might cost you more, but if these "options" expired worthless, then your house would have maintained it's value. For me, I wouldn't bother buying such "insurance" because if I felt that worried, I'd rent.

 

[VFK57]

I would rather worry where to buy a retirement property. Many retirees looking for nice weather states like Florida, California, Arizona etc, but for many living close to a family is preferable or needed. In regard to when to buy I would not worry too much since it is hard, if possible, to time the Market. In 2004 we purchased an investment condo and in 2007 it was up over 20%, in 2009 it dropped about 50% below the price we paid. By 2013 it went back to original price paid and currently it is again up 32 -35% over price paid. Also, depending on location, Real Estate is one of most reliable inflation protected investment. If inflation would go higher then Fed's planning you will be glad you bought it now.

 

[pb4uski]

Renting is almost always more expensive than living in a paid off home...

Do you know of any market where the rent for a home is cheaper than the taxes and insurance alone? I've yet to see that market myself. In the market where it saves money to not have to pay a mortgage or rent and still have a place to live (everywhere I've ever heard of), the renter is the one losing the opportunity cost of money compared to the person in the paid off home.

Pay off a home in 15 years at a low interest rate, then have 40 years of no rent or mortgage would, in my rough napkin calculations, provide a lot more opportunity for wealth accumulation than that same person paying rent for 55 years in pretty much every market..

Assumption #1 is that I have to pay for a place to live. This will either be paid for in the form of rent or PITI (hopefully followed by a long period of just TI). The "equity" that I get from the PITI and can later use to downsize to a smaller/cheaper home is why many people say that renting is "throwing away money" because renting doesn't get you that.

If I'm going to spend $1,500 on housing per month, starting with $0 invested/saved (let's assume a VA loan with 0% down), whether renting or buying (since rental prices are on par with owning prices where I live), that money isn't getting invested in either case. It has no "lost opportunity cost" due to putting it towards something that builds equity vs paying it to a landlord. 15 years from now, however, I'm still going to be paying inflation adjusted full rental price if I rent while I'll be paying a small fraction of the $1,500 to cover taxes/insurance/maintenance instead if I used that $1,500/month to pay off my own home.

You can't "cash out" the rental checks you paid (the landlord did that already), just like you generally won't "cash out" your only place to live. So, the "opportunity cost" difference isn't "what the house is worth and what that would get if I invested it". The real opportunity cost is "the difference in cost between renting and buying".

So the "opportunity cost" is the difference between rental cost or owning cost and what the cumulative effect of that difference might be. In "an average" market, similar homes for rental and owning have similar costs with rentals tending to be slightly less costly UNTIL the mortgage is paid off, then there is a massive shift to owning having a much lower cost.

You're sort of changing the discussion mid-stream...you first say that owning in a paid off home is always cheaper (which is not necessarily true)... and then once we point out that you are ignoring opportunity costs you change it up to make it a mortgaged home... which is it going to be? And then you make it a VA loan which very few are eligible for! More obfuscation!

IF one can find a situation where you can own for 0% down and your PITI is the same as rent for similar property of course owning is better... its the same cash outflows but building some equity with mortgage principal payments.... but alas, there are very few markets in the US where PITI and rent are the same for similar properties.... usually PITI is substantially more... if it were the same then no one who expects to remain in the same area for more than a few years would bother to rent.

That and it is hard to find those elusive 0% down loans.

 

[sengsational]

One thing the OP could do is go ahead and buy the house. If the value of it went down and he wasn't selling it, just live there. Or, if he didn't feel like living there any more, just turn it into a rental instead of selling low. I did that with a house once. Rather than sell into a soft market, I turned it into a rental. It was a bit of a pain, but the market got super-heated a couple of years later and I made a good profit when I finally sold it. One thing to watch out for is condo rules or homeowner's association rules that limit or prohibit non-owner occupied dwellings. Just steer clear of those and you have an 'out' if you feel like moving during a soft market.

 

[exnavynuke]

You're sort of changing the discussion mid-stream...you first say that owning in a paid off home is always cheaper (which is not necessarily true)... and then once we point out that you are ignoring opportunity costs you change it up to make it a mortgaged home... which is it going to be? And then you make it a VA loan which very few are eligible for! More obfuscation!

IF one can find a situation where you can own for 0% down and your PITI is the same as rent for similar property of course owning is better... its the same cash outflows but building some equity with mortgage principal payments.... but alas, there are very few markets in the US where PITI and rent are the same for similar properties.... usually PITI is substantially more... if it were the same then no one who expects to remain in the same area for more than a few years would bother to rent.

That and it is hard to find those elusive 0% down loans.

Show me a realistic scenario where renting for 50 years is more cost advantageous (starting with $0, or a 20% down payment if you'd really like) for an average priced home. Don't forget to include the fact that PI doesn't go up while rent does in your calculations. Or better yet, I'll show you some..

I've done some the research:

Median Gross Rent $959
For 2015

Residential Rent Statistics for the United States | Department of Numbers

For now, let's ignore that the average rent is significantly inferior to the average home purchase in size and, often, location.

Median new home price Nov 2015 $312,600
Median existing home price 30, 2015 $220,000.0
https://ycharts.com/indicators/sales_price_of_existing_homes

https://ycharts.com/indicators/sales_price_of_existing_homes

Per the census bureau, there's typically ~1 new home sale per 10 existing home sales so we'll use a 10x weighting on existing homes vs new homes and get a fictional home price of ~$228k.

Nov 2015 mortgage rates https://www.totalmortgage.com/blog/...rtgage-rates-for-friday-november-6-2015/30408

average rate on a 30-year fixed-rate mortgage to be 3.87%, up from 3.76% the week prior.

A mortgage on that fictional home, using those rates, would be $1,071/month. Plus an average home insurance + property taxes would put that around $1,300/month. This gives the renter a $341/month advantage. If putting 20% down, however, the PI goes to $857 but we'll leave TI the same at $229/month for a total of $1,086/month.

1913-2013 inflation rate

As we saw the Average annual inflation rate is 3.22%.

Let's use historic market returns (S&P 500) for calculating how much opportunity each is given (renter while his is cheaper, buyer when his becomes cheaper). Let's use 1913-2013 for consistency and not forget to adjust for inflation and include dividend reinvestment, which gives us an average return of 6.35%.
https://dqydj.com/sp-500-return-calculator/

So, in the tables below, the "negative" difference is "renter has this much more that year" and the positive difference is "owner has that much more".

Year	Rent	PI – 0% down	TI – 0% down	Difference 0% down	PI 20% down	Renter Investment 0% down)	Owner Investment 0% down	Difference 20% down	Renter Investment 0% down)	Owner Investment 20% down
1	$11,508.00	$12,372.00	$2,748.00	-$3,612.00	$10,284.00	$3,612.00		-$1,524.00	$41,524.00
2	$11,878.56	$12,372.00	$2,836.49	-$3,329.93	$10,284.00	$7,171.29		-$1,241.93	$45,402.70
3	$12,261.05	$12,372.00	$2,927.82	-$3,038.77	$10,284.00	$10,665.44		-$950.77	$49,236.55
4	$12,655.85	$12,372.00	$3,022.10	-$2,738.24	$10,284.00	$14,080.94		-$650.24	$53,013.31
5	$13,063.37	$12,372.00	$3,119.41	-$2,428.04	$10,284.00	$17,403.12		-$340.04	$56,719.69
6	$13,484.01	$12,372.00	$3,219.85	-$2,107.84	$10,284.00	$20,616.05		-$19.84	$60,341.23
7	$13,918.20	$12,372.00	$3,323.53	-$1,777.33	$10,284.00	$23,702.51		$310.67	$64,172.90	$310.67
8	$14,366.36	$12,372.00	$3,430.55	-$1,436.19	$10,284.00	$26,643.80		$651.81	$68,247.88	$982.21
9	$14,828.96	$12,372.00	$3,541.01	-$1,084.05	$10,284.00	$29,419.74		$1,003.95	$72,581.62	$2,048.52
10	$15,306.45	$12,372.00	$3,655.03	-$720.58	$10,284.00	$32,008.47		$1,367.42	$77,190.56	$3,546.02
11	$15,799.32	$12,372.00	$3,772.73	-$345.41	$10,284.00	$34,386.42		$1,742.59	$82,092.16	$5,513.79
12	$16,308.06	$12,372.00	$3,894.21	$41.85	$10,284.00	$36,569.96	$41.85	$2,129.85	$87,305.01	$7,993.76
13	$16,833.18	$12,372.00	$4,019.60	$441.58	$10,284.00	$38,892.15	$486.08	$2,529.58	$92,848.88	$11,030.94
14	$17,375.21	$12,372.00	$4,149.03	$854.17	$10,284.00	$41,361.80	$1,371.12	$2,942.17	$98,744.78	$14,673.58
15	$17,934.69	$12,372.00	$4,282.63	$1,280.06	$10,284.00	$43,988.27	$2,738.25	$3,368.06	$105,015.07	$18,973.41
16	$18,512.18	$12,372.00	$4,420.53	$1,719.65	$10,284.00	$46,781.53	$4,631.78	$3,807.65	$111,683.53	$23,985.88
17	$19,108.28	$12,372.00	$4,562.87	$2,173.40	$10,284.00	$49,752.16	$7,099.30	$4,261.40	$118,775.43	$29,770.38
18	$19,723.56	$12,372.00	$4,709.80	$2,641.77	$10,284.00	$52,911.42	$10,191.87	$4,729.77	$126,317.67	$36,390.57
19	$20,358.66	$12,372.00	$4,861.45	$3,125.21	$10,284.00	$56,271.29	$13,964.26	$5,213.21	$134,338.85	$43,914.58
20	$21,014.21	$12,372.00	$5,017.99	$3,624.22	$10,284.00	$59,844.52	$18,475.21	$5,712.22	$142,869.36	$52,415.37
21	$21,690.87	$12,372.00	$5,179.57	$4,139.30	$10,284.00	$63,644.65	$23,787.69	$6,227.30	$151,941.57	$61,971.05
22	$22,389.31	$12,372.00	$5,346.35	$4,670.96	$10,284.00	$67,686.08	$29,969.17	$6,758.96	$161,589.86	$72,665.17
23	$23,110.25	$12,372.00	$5,518.51	$5,219.74	$10,284.00	$71,984.15	$37,091.95	$7,307.74	$171,850.81	$84,587.15
24	$23,854.40	$12,372.00	$5,696.20	$5,786.20	$10,284.00	$76,555.14	$45,233.49	$7,874.20	$182,763.34	$97,832.64
25	$24,622.51	$12,372.00	$5,879.62	$6,370.89	$10,284.00	$81,416.39	$54,476.71	$8,458.89	$194,368.81	$112,503.90
26	$25,415.36	$12,372.00	$6,068.94	$6,974.41	$10,284.00	$86,586.33	$64,910.40	$9,062.41	$206,711.23	$128,710.31
27	$26,233.73	$12,372.00	$6,264.36	$7,597.37	$10,284.00	$92,084.57	$76,629.57	$9,685.37	$219,837.39	$146,568.79
28	$27,078.46	$12,372.00	$6,466.08	$8,240.38	$10,284.00	$97,931.94	$89,735.93	$10,328.38	$233,797.07	$166,204.29
29	$27,950.38	$12,372.00	$6,674.28	$8,904.10	$10,284.00	$104,150.61	$104,338.27	$10,992.10	$248,643.18	$187,750.36
30	$28,850.39	$12,372.00	$6,889.20	$9,589.19	$10,284.00	$110,764.18	$120,552.94	$11,677.19	$264,432.02	$211,349.70
31	$29,779.37		$7,111.03	$22,668.34		$117,797.70	$150,876.39	$22,668.34	$281,223.46	$247,438.75
32	$30,738.26		$7,340.00	$23,398.26		$125,277.86	$183,855.30	$23,398.26	$299,081.15	$286,549.37
33	$31,728.04		$7,576.35	$24,151.69		$133,233.00	$219,681.80	$24,151.69	$318,072.80	$328,896.94
34	$32,749.68		$7,820.31	$24,929.37		$141,693.30	$258,560.97	$24,929.37	$338,270.42	$374,711.26
35	$33,804.22		$8,072.12	$25,732.10		$150,690.82	$300,711.69	$25,732.10	$359,750.59	$424,237.53
36	$34,892.72		$8,332.05	$26,560.67		$160,259.69	$346,367.55	$26,560.67	$382,594.76	$477,737.28
37	$36,016.26		$8,600.34	$27,415.92		$170,436.18	$395,777.81	$27,415.92	$406,889.52	$535,489.52
38	$37,175.98		$8,877.27	$28,298.72		$181,258.88	$449,208.42	$28,298.72	$432,727.01	$597,791.82
39	$38,373.05		$9,163.12	$29,209.93		$192,768.81	$506,943.09	$29,209.93	$460,205.17	$664,961.54
40	$39,608.66		$9,458.17	$30,150.49		$205,009.63	$569,284.47	$30,150.49	$489,428.20	$737,337.09
41	$40,884.06		$9,762.72	$31,121.34		$218,027.75	$636,555.37	$31,121.34	$520,506.89	$815,279.33
42	$42,200.53		$10,077.08	$32,123.45		$231,872.51	$709,100.08	$32,123.45	$553,559.08	$899,173.02
43	$43,559.39		$10,401.56	$33,157.82		$246,596.41	$787,285.76	$33,157.82	$588,710.08	$989,428.33
44	$44,962.00		$10,736.49	$34,225.50		$262,255.28	$871,503.91	$34,225.50	$626,093.17	$1,086,482.53
45	$46,409.77		$11,082.21	$35,327.57		$278,908.49	$962,171.98	$35,327.57	$665,850.09	$1,190,801.74
46	$47,904.17		$11,439.06	$36,465.11		$296,619.18	$1,059,735.01	$36,465.11	$708,131.57	$1,302,882.76
47	$49,446.68		$11,807.39	$37,639.29		$315,454.50	$1,164,667.47	$37,639.29	$753,097.92	$1,423,255.11
48	$51,038.87		$12,187.59	$38,851.28		$335,485.86	$1,277,475.13	$38,851.28	$800,919.64	$1,552,483.08
49	$52,682.32		$12,580.03	$40,102.29		$356,789.21	$1,398,697.09	$40,102.29	$851,778.04	$1,691,168.04
50	$54,378.69		$12,985.11	$41,393.58		$379,445.33	$1,528,907.94	$41,393.58	$905,865.95	$1,839,950.79

Note: despite having the renter have a (on average) smaller place etc thus keeping their costs down, by year 29 in the 0% down scenario, the owner is ahead including investments. It takes until year 33 in the 20% category for the owner to overtake the renter. By year 50, the owner has twice as much money in investments than the guy who's still paying rent despite putting 20% down (which is the best scenario for the renter with the 0% down scenario having the owner with almost 5x as much money). In each scenario, inflation catches up to the rental price relatively quickly and paying off the home puts a MASSIVE increase in the relative ability to sock money away for the homeowner.

I could rerun the numbers to show how vastly superior the end result is for the person with the lower rate, but higher payment, 15 year loan, but I imagine anyone here could figure that out without the need to see those numbers...

 

[exnavynuke]

Renting wins out financially if you move frequently enough to make buying/selling costs outweigh the other gains or if you live in an extremely unusual market where renting costs massively less than buying (or if inflation never occurs over long periods of time).

 

[ncbill]

Assumption #1 is that I have to pay for a place to live. This will either be paid for in the form of rent or PITI (hopefully followed by a long period of just TI). The "equity" that I get from the PITI and can later use to downsize to a smaller/cheaper home is why many people say that renting is "throwing away money" because renting doesn't get you that.

If I'm going to spend $1,500 on housing per month, starting with $0 invested/saved (let's assume a VA loan with 0% down), whether renting or buying (since rental prices are on par with owning prices where I live), that money isn't getting invested in either case. It has no "lost opportunity cost" due to putting it towards something that builds equity vs paying it to a landlord. 15 years from now, however, I'm still going to be paying inflation adjusted full rental price if I rent while I'll be paying a small fraction of the $1,500 to cover taxes/insurance/maintenance instead if I used that $1,500/month to pay off my own home.

You can't "cash out" the rental checks you paid (the landlord did that already), just like you generally won't "cash out" your only place to live. So, the "opportunity cost" difference isn't "what the house is worth and what that would get if I invested it". The real opportunity cost is "the difference in cost between renting and buying".

So the "opportunity cost" is the difference between rental cost or owning cost and what the cumulative effect of that difference might be. In "an average" market, similar homes for rental and owning have similar costs with rentals tending to be slightly less costly UNTIL the mortgage is paid off, then there is a massive shift to owning having a much lower cost.

You're still earning a much lower real return by "building equity" in your home instead of investing it.

The trade-off is that it does subsidize your housing cost, but only after your home is paid off.

However, statistically, most won't live in the same home the 30 (or 15) years necessary to retire their mortgage - they'll change houses and start the clock on a new loan.

 

[pb4uski]

No one said that it is cheaper to rent than to own for long periods of time... we just said that if you live in a paid-off home that you need to factor in the opportunity cost of having money tied up in a house rather than invested... so the difference is not just the difference between rent on the one hand and property taxes and insurance on the other... but needs to consider other elements.

In a way you conceded that opportunity cost needs to be considered since you included it in your analysis.

A home is a place to live and not an investment.. you can acquire that use in two different ways... if you plan to be there for a substantial period of time it is better to own but if your time horizon is short then it is better to rent.

I could pick nits with your numbers... no maintenance or major repairs or roof in 50 years of ownership for example... but that's not the point.

 

[exnavynuke]

You're still earning a much lower real return by "building equity" in your home instead of investing it.

The trade-off is that it does subsidize your housing cost, but only after your home is paid off.

However, statistically, most won't live in the same home the 30 (or 15) years necessary to retire their mortgage - they'll change houses and start the clock on a new loan.

A. Already showed the calculations for staying in a home. And I was generous enough to not even include home equity gained in the equation at all...

B. The equity doesn't "reset", it takes a hit due to buy/sell costs. In the long run, buying results in a paid off home for most owners AND that equity can be accessed in one way or another if desired (HELOC, reverse mortgage, etc) and should they decide to. It's math.

That's just financial though. It doesn't include intangibles like desired to have the flexibility to easily move quickly, hating ownership, etc.

 

[Ready]

Homes in my neighborhood are still selling for less than their 2005 peak price, so for those who bought at the peak, even after holding on to their homes for 13 years they still haven't recovered their losses.

But if the home I was thinking about buying was around $300K I would probably just buy it anyway because I hate the hassle of renting. If the house were over $1M, I would probably be nervous about buying right now.

 

[W2R]

I read somewhere that "all real estate is local". Here, it is more expensive to rent vs buy compared with other locations, perhaps due to the hurricanes.

OK, that said, I bought my house two years ago and I never plan to move again, if I can help it. I love it here. It is a slightly smaller but more expensive house than before. Also the value of my new-to-me house has gone up lots in the past two years, but so what. To me it just does not matter.

I am getting tremendous satisfaction out of living in my dream house each day. Hard to describe but it's a lifetime goal; if I ever had a bucket list, owning and living in this house was the only thing in it.

Still, if I was moving to a different state where I had never lived, I would live in a rental for a year or so before buying. It helps to be thoroughly familiar with the area before buying, IMO.

 

[ncbill]

A. Already showed the calculations for staying in a home. And I was generous enough to not even include home equity gained in the equation at all...

B. The equity doesn't "reset", it takes a hit due to buy/sell costs. In the long run, buying results in a paid off home for most owners AND that equity can be accessed in one way or another if desired (HELOC, reverse mortgage, etc) and should they decide to. It's math.

That's just financial though. It doesn't include intangibles like desired to have the flexibility to easily move quickly, hating ownership, etc.

But your tables are no more than a theoretical exercise.

People simply don't stay in the same place for 50 years.

Transaction costs for residential real estate are huge, akin to a large front-end (and even larger back-end) load compared to other forms of investing.

Accessing the equity (which is very little in the first 15-20 years on a 30-year loan) costs even more in fees, especially with a reverse mortgage.

That matters because you've chosen to accept a much lower historical real rate of return by "investing" in a home, rather than deploying that capital to other investments.

 

[exnavynuke]

But your tables are no more than a theoretical exercise.

People simply don't stay in the same place for 50 years.

Transaction costs for residential real estate are huge, akin to a large front-end (and even larger back-end) load compared to other forms of investing.

Accessing the equity (which is very little in the first 15-20 years on a 30-year loan) costs even more in fees, especially with a reverse mortgage.

That matters because you've chosen to accept a much lower historical real rate of return by "investing" in a home, rather than deploying that capital to other investments.

Edit:
Ya know what, nevermind, believe what you wish. You're welcome to think that everyone in the world moves every year and that landlords are all losing money because renting is cheaper than owning in your opinion. That's not going to impact the truth at all.

 

[Brat]

It has been a while since my family vacationed in Jackson Hole (ok, Wilson) - we were there every year for at least 10 years - but the Idaho side of the Tetons is not a high demand area unless you like to ski Targhee. If you want security in property values buy a place in the 'Hole', even a small fixer. Odds are home prices there are like a barbell. Low cost homes purchased by Federal employees and service workers, high priced homes for the wealthy. Look in the middle.

Alternatives would be Sun Valley, Coeur d'Alene.

 

[l8_apex]

To the OP: I didn't read your prior thread, and perhaps your wish list was laid out in more detail there. I'm not sure what your priorities include, so all that I can say is to think about expanding your search area a bit. The communities in this area that aren't so tourism focused will have less expensive housing.

Some of those places should be cheap enough that you shouldn't have too much concern about how far the value may drop in a downturn. (i.e. buy a home for $250k, look at pricing history and guess that it won't drop by more than $50k bar some catastrophe)

Those less tourism focused towns will also have lower rental rates - the difference in rents is greater than the difference in purchase prices in my experience. (and that's certainly the case for shorter term rentals during peak seasons)

What's the draw for Tetonia? If it's "to be near the mountains", then what about a less expensive town nearby, like Rexburg or Idaho Falls? If living a "resort community" is a must, then you're going to pay a premium... In my lifetime I've seen much larger price swings in resort pricing than in more non-tourist areas. Big Sky is my best example of that - as a kid they were practically giving away condos. Now things there are sky high in my opinion.

You're also going to have to be OK with the religious majority in the state, the mormons. For most folks that's not really an issue, but for a minority of people it's a deal breaker.

 

[harley]

We built our MD house in 2008, and almost immediately watched the value drop by ~35%. Now 10 years later we're still down about 25% (crappy micro-market), not even adjusting for inflation. But it's a beautiful place to live, and we wouldn't have sold it anyway so the value doesn't really matter.

Now we are thinking about moving closer to DD and the girls, and I must admit the loss in value is a bit painful. But it's a home, not an investment, so we'll do what makes us happy vs. being held hostage by price. Even if it was an investment, it still a better one than my investments (much smaller) in Enron and WorldCom.

 

[W2R]

I am not aiming this comment at any particular person, but many people find the forum's "ignore" function to be helpful. Here is how to use it:

http://www.early-retirement.org/forums/f32/forums-101-posting-accounts-basics-40168.html#post739553

I like to post this information now and then in the hopes that it will enhance someone's enjoyment during their time here at the ER Forum.

 

[harley]

I'm thinking of adding that information to my sig line, so I can annoy people with a clear conscience.

 

[MichaelB]

I'm thinking of adding that information to my sig line, so I can annoy people with a clear conscience.

What makes you think you're not already doing that?

j/k

 

[W2R]

I'm thinking of adding that information to my sig line, so I can annoy people with a clear conscience.

But if you tell everybody, then how could I earn my pay? I think I'll ask for a raise from $0.00/hour to $0.00 each and every 60 minutes.

 

[BeachOrCity]

Rent